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Related Party Convertible Notes Payable
9 Months Ended
Sep. 30, 2015
Related Party Transactions [Abstract]  
Related Party Convertible Notes Payable

NOTE 4 — Related Party Convertible Notes Payable

 

Short Term Related Party Convertible Notes Payable

Short term related party convertible notes payable at September 30, 2015 and December 31, 2014 were $380,696. The notes were issued on September 4, 2013 to officers and directors of the Company and mature on September 4, 2017. The notes have an interest rate of 8% per annum that compounds quarterly, and contain a holder call provision that became effective on September 4, 2014. Accrued interest was $67,990 and $42,179 at September 30, 2015 and December 31, 2014, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three and nine months ended September 30, 2015 was $8,869 and $25,811, respectively. Interest expense for the three and nine months ended September 30, 2014 was $8,193 and $23,845, respectively. The notes and accrued interest are convertible into common stock at the option of the holder at $2.44 per share as long as warrants issued on November 19, 2010 are outstanding (warrants expire May 20, 2016) or at $1.25 per share. The convertible notes are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with the Company’s bank.

 

Long Term Related Party Convertible Note Payable

Long term related party convertible note payable at September 30, 2015 and December 31, 2014 was $371,929. Issued to the Company’s Chairman on September 4, 2013 and maturing on September 4, 2017, the note has an interest rate that compounds quarterly of 18% per annum as long as the warrants issued on November 19, 2010 are outstanding (warrants expire May 20, 2016) or 12% per annum thereafter. Principal and accrued interest on the note payable are convertible into common stock at the option of the holder at $2.44 per share if the November 19, 2010 warrants are outstanding or at $1.25 per share. Accrued interest was $164,034 and $97,900 at September 30, 2015 and December 31, 2014, respectively, and was included in Accounts Payable and Accrued Expenses. Interest expense for the three and nine months ended September 30, 2015 was $23,261 and $66,134, respectively. Interest expense for the three and nine months ended September 30, 2014 was $19,506 and $55,457, respectively. The convertible note is secured by all of the assets of the Company and is subordinated to amounts outstanding under the Company’s working capital bank line of credit with the Company’s bank.